The change of government is alarming creditors of Ukraine

Смена правительства настораживает кредиторов Украины

Western investors fear that the Ukrainian authorities decided to change the country’s course and to stop the initiated reforms.

The publication reports that the names Goncharuk, Markarova, Milovanova, Ryaboshapka and Sytnik directly referred to in the report, Morgan Stanley on March 5. In it, the bankers advised clients to reduce positions in the Ukrainian Eurobonds because of the uncertainty with the new government.

Part of the report Morgan Stanley

The reasons for this conclusion:

  • Morgan Stanley does not understand what to expect from the government of Denis Smagala. Will his Cabinet to continue the reforms – the main concern of bankers.
  • From the Cabinet left key, according to Morgan Stanley, the reformers Oksana Markarova, and Tymofiy mylovanov.
  • Instead Markarova the Finance Minister was Igor Umansky, who has previously publicly expressed doubt of the necessity of IMF support for Ukraine.
  • Pressure on Sytnik and replace Ryaboshapka here – a possible sign of a rollback of anti-corruption reforms.

It is also stated that on Thursday afternoon, the Ukrainian Eurobonds maturing in 2032 fell by 3 percentage points.

Morgan Stanley, believe that the proposal of Smugala of budget revision for 2020, and increase wages and pensions will not help: “the government will have to expand the budget deficit that does not like the IMF, or raise taxes, which is unlikely”.

In the financial sinter also do not agree with the approval of the new Prime Minister that the strengthening of the hryvnia in 2019 (plus 14.5% of the dollar – EP) have hurt the industry, but did not affect the welfare of Ukrainians. Morgan Stanley sees this as an allusion to the fact that the hryvnia needs to devalue. “Given the independence of the NBU, do not really understand what tools are going to use the government to weaken the hryvnia,” – noted the authors of the report.

The name of the new Minister of Finance Igor Umansky is mentioned separately in the list of risks, which he sees Morgan Stanley. His actions will depend largely on the key feature of the government Denis Smagala – cooperation between Ukraine and the IMF.

In the publication they write that the process of negotiations on the new programme (in December 2019 Fund tentatively agreed on Ukraine is 5.5 billion dollars for three years, but officially the program is not confirmed – EP), will likely be delayed even if Ukraine will soon perform two other tasks – the adoption of laws on land market and on banking regulation (the so-called “andikalovsky” – EP).


On March 4, the Verkhovna Rada has dismissed Alexey Goncharuk as Prime Minister on the basis of submitted their application. This means automatic resignation of the entire Cabinet.

On the same day, the Verkhovna Rada 291 voice voted for the appointment of the Prime Minister, acting Vice-Premier Denis Smagala.

Смена правительства настораживает кредиторов Украины

Смена правительства настораживает кредиторов Украины